Morning Commentary: Junk trades higher; LifePoint Health, Ryerson, Performance Food on deck

By Paul A. Harris

Portland, Ore., May 12 – Cash bonds were up ¼ point on Thursday morning, according to a trader based in New York.

The high-yield ETFs were flat to slightly higher, outperforming equities, which by mid-morning had moved into the red.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was 7 cents better, or 0.07%, at $83.09 per share. The SPDR Barclays High Yield Bond ETF (JNK), at $34.96 per share, was up 2 cents, or 0.07%.

Evidence continued to mount that the cash tide has turned for the ETFs, which saw their third consecutive positive flow on Wednesday, trailing substantial daily outflows preceding that period.

The ETFs saw $511 million of inflows on Wednesday.

Asset managers, however, saw $75 million of outflows on Wednesday.

Primary market

In the primary market LifePoint Health, Inc. plans to price a $400 million offering of eight-year senior notes (current ratings Ba2 /BB-) in a Thursday drive-by.

The deal is in the market with early yield guidance of 5½%, according to a trader, who added that it will come tighter than that.

Goldman Sachs & Co. is the left bookrunner for the debt refinancing. BofA Merrill Lynch, Barclays, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and UBS Securities LLC are the joint bookrunners.

Ryerson Holding Corp. talked its $650 million offering of six-year senior secured notes (Caa1/B-) to yield 11¼% to 11½%.

Talk comes on the wide end of early guidance in the low 11% yield context, according to market sources.

The deal is expected to price Thursday.

And Performance Food Group, Inc. is in the market with a $350 million offering of eight-year senior notes (B2/BB-) expected to price Thursday afternoon.

The deal was talked to yield 5½% to 5¾% on Wednesday, inside of earlier 5¾% to 6¼% guidance.

Meanwhile, look for the junk portion of the mammoth Dell Inc. debt financing for its acquisition of ECM Corp. to be decreased from the $9 billion that the market has been anticipating, sources say.

Dell aims to raise as much lower-cost capital as it can in the high-grade market, where the anticipated $16 billion of high-grade bonds – now expected to launch in the week ahead – could grow, the banker said.

positive last three days

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